Rasmussen and Yatseniuk exchanged views on possible ways in which a proposed NATO trust fund could be used to support Kiev's in defence areas including command and control, communications and cyberdefence, it said.

Rasmussen arrived in the Ukrainian capital Kiev a day after Ukrainian forces carried out their first air strike on the pro-Russian rebel stronghold of Donetsk, as they said they were preparing to liberate the city, although they also reported their highest death toll in weeks in the face of fierce rebel bombardments.

NATO recently said that Russia had increased the number of "combat-ready" troops on its border with Ukraine to 20,000 from 12,000 in mid-July and Moscow could be planning a ground invasion in support of pro-Russian separatists.

Meanwhile, clashes between government forces and pro-Russia fighters in eastern Ukraine have continued on Thursday. One person was killed and two injured on Thursday when a hospital was hit by shelling, local health authorities said.

"Today as a the result of a mortar shell hitting the... first Donetsk city hospital, one person died and two were injured," the regional health administration said in a statement, adding that no medics were among the casualties.

Overnight shelling killed three people and wounded five as government forces tightened their grip on Donetsk, the city council said on Thursday.

'Selling soap bubbles'

"This is a dangerous situation," NATO spokeswoman Oana Lungescu said, warning, "Russia could use the pretext of a humanitarian or peacekeeping mission as an excuse to send troops into eastern Ukraine."

Donald Tusk, Poland's prime minister, said "the threat of a direct intervention [by Russia into Ukraine] is certainly greater than it was even a few days ago".

German Chancellor Angela Merkel called on Russian President Vladimir Putin to use his influence with the separatists for the "stabilisation" of Ukraine.

Moscow said those making the claims about their troop movements were "selling soap bubbles".

"Movements of such forces of thousands of troops and equipment are not possible in such a short time," said Russian defence ministry spokesman Igor Konashenikov.

The US and EU have slapped a range of tough sanctions on Moscow, with Switzerland, Japan and Canada following suit, potentially pushing Russia's fragile economy towards recession.

Putin struck back on Wednesday with import bans and restrictions on farm products from countries that have targeted Moscow.

Russia's RIA Novosti news agency quoted a government official as saying that Russia will block all U.S. agricultural imports.

The text of Putin's decree released by the Kremlin said the affected imports would be "banned or limited" for one year.